Capital Link Shipping Forum Analyst & Investor Day

Greek Shipping a Global Leader
A REVIEW OF THE GLOBAL SHIPPING MARKETS
Despite the cyclical character of shipping, Greek shipowners have managed to
survive in weak freight markets and turn losses into profits when markets
improved. The global shipping and investment communities continue to look
at the behavior of Greek shipowners during peaks and troughs, as they have
been consistently able to prove their success in one of the most significant,
difficult and unpredictable professions of the world.
Greece, a country of about 11 million people, controls by far the biggest share,
between 15% and 20%, of the world's shipping fleet in terms of carrying capacity
measure in deadweight tonnage (dwt) making the country a top player in
world trade. It controls 20.5% of the tanker fleet, 19.5% of the dry bulk fleet,
13.5% chemical tankers, and 5.9% of containerships.
After pouring $4.5 billion in 2009 buying 229 vessels, in 2010, Greek
shipowners topped the global list ahead of the Chinese as the most aggressive
buyers of second hand and newbuilding vessels. According to John Cotzias of
N. Cotzias Shipping Consultants, until the end of April 2010, Greek shipowners
committed to buy 98 vessels investing $2.6 billion, with the Chinese
coming second with 111 vessels and $1.75 billion. This included 55 dry bulk
vessels ($1.44 billion), 24 tankers ($919 million) and 14 containers ($260
million).
Shipping A Global Business
The shipping sector is the second largest pillar of Greece’s 240 billion Euro
Capital Link Dry Bulk vs. S&P 500 and Baltic Dry Index
Source: Bloomberg, Capital Link Research
($312 billion) economy, following tourism. There are about 1,400 shipping
companies in Greece employing close to 250,000 people, generating significant
currency inflows and contributing annually about $20 billion to the Greek
economy. But shipping is a global business conducted outside Greece. “Even
though we have our executives offices in Greece, our business is affected by
trends in the global energy and commodity markets and not by developments
in the domestic economy” states John Dragnis, COO of Goldenport Holdings
(LSE:GPRT), an owner of dry bulk and container vessels. “Actually, the
current situation with domestic unemployment about to rise, may steer a higher
number of Greeks to the maritime profession, making up for the shortages we
experienced in skilled personnel in previous years” states Nikolas Tsakos,
CEO of TEN.
Greek shipping is a unique success story on a global scale. It brings to mind
legendary names like Onassis, Niarchos, Livanos and many others. The ranks
of Greek shipowners today include the scions of families with a long tradition
in shipping but also several self made entrepreneurs. Among the listed companies,
Euroseas (NASDAQ: ESEA), an owner of dry bulk and container vessels,
boasts the Pittas shipping family tradition of 136 years.
Behind every major shipping company is a charismatic CEO. Shipping has
always been a family business not only in Greece but everywhere, with the
founder and CEO making all decisions. But as companies grew larger and the
younger generation took over, corporate procedures and governance guidelines
were put in place opening up shipping to the public capital markets and
spurring it to a new growth era.
Shipping and the Capital Markets
Shipping is a capital intensive business and as the availability of bank financing
declined, publicly listed shipping companies have a competitive advantage
over their private peers in terms of access to capital. But public shipping
companies today represent only about 5-7% of the global fleet, indicating the
potential of shipping for the capital markets.
The U.S. capital markets have become the destination of choice for shipping
companies from all over the world. Today, the U.S. has the largest group of
listed shipping companies, with significant analyst follow up and a large and
growing institutional and retail investor base. From 2005 to 2009 over $13.3
billion of equity was raised by shipping companies through public offerings
with IPOs accounting for $5.7 billion. In 2010, until the end of April, another
$1.4 billion was raised, of which $650 million was in IPOs bringing three new
companies to the market, two tanker companies (Crude Carriers –NYSE: CRU
and Scorpio Tankers – NYSE:STNG) and one dry bulk company (Baltic
Trading, NYSE: BALT).
About half of the 44 U.S. listed shipping companies today claim a Greek link.
Shipping is a well defined sector in the U.S. capital markets – 44 companies in
Capital Link Tanker vs. S&P 500 and Baltic Dirty Tanker Index
Source: Bloomberg, Capital Link Research